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Coronavirus impact: Is there hope for Indian pharma beyond Ides of March?

It is not as if there is a complete standstill in imports from China, there is, however, no clarity on the extent to which production and shipments have resumed

twitter-logoE Kumar Sharma | March 3, 2020 | Updated 02:13 IST
Coronavirus impact: Is there hope for Indian pharma beyond Ides of March?

Time is ticking and Indian pharmaceutical units dependent on crucial raw materials from China - active pharmaceutical ingredients and key starting materials to make medicines in India - are waiting and watching developments unfold this month. The industry expected things in China to return back to normal by mid-February at the conclusion of the extended Chinese New Year holidays. However, it seems far from business as usual.

According to a senior member of the Bulk Drug Manufacturers Association, if raw material supplies from China remain disrupted beyond March then it would have an impact on production of the active pharmaceutical ingredients made using key starting materials and drug intermediates from China. This will, in turn, affect the production of final formulated products - the tablets and capsules that people consume.

It is not as if there is a complete standstill in imports from China. Officials from Indian pharmaceutical companies say manufacturing and shipping have resumed in parts of China away from the epicenter of coronavirus outbreak in Wuhan. There is, however, no clarity on the extent to which production has resumed and shipments commenced. For instance, a senior official of a leading company estimates that around 30 per cent of usual pharmaceutical production appears to have started in China, and 25 per cent of shipments have resumed.

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"Most API (Active Pharmaceutical Ingredient) manufacturers in China are not working at full capacity, but are working partially, and shipments are coming in. Ports and airlines are functional now. Our own supply chain is working fine but not at full scale. We have some stock that we always maintain, which came in handy during this emergency. Whatever vendors have already manufactured, we have requested them to ship. That is also coming in bits and pieces now, and the contact of an agent that government offered is also available for us. We will work in a multi-pronged approach," said Cipla Global CFO Kedar Upadhye.

"As of now there is no problem in terms of API inventory, but in a month or month and a half, if the plants in China don't operate at full capacity, then there might be an issue. But as of now, we are okay," he further added.

There are however no easy solutions. "In the near or medium term, there is no substitute to China because their capacities are massive. In India, if you want to replicate that, the land required, the reactors that you have to put in, technology, labour arbitrage, there are multiple things here. One can't just shift the manufacturing to India from China. Also, when one files a dossier with the regulator, it has the API source as China, and changing the source would require the company to make changes to the dossier," said Upadhye.

Most, however, echo one point raised by him about the long-term solution to the problem, which centres around mitigating the supply security risks by diversifying sourcing either from within India or from locations outside China.

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